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Senate acts to ban drug cost 'gag clauses'; House health panel mulls legislation

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Senate acts to ban drug cost 'gag clauses'; House health panel mulls legislation

Lawmakers on both sides of Capitol Hill took steps this week to ban so-called gag clauses, which prevent pharmacists from telling customers when they can pay less in out-of-pocket costs for their prescription medicines by not using their insurance plans.

By unanimous consent, the Senate on Sept. 4 adopted the Know the Lowest Price Act, or S. 2553, which would prohibit Medicare Part D prescription drug plans and their pharmacy benefit managers, or PBMs, from using gag clauses.

The bill, introduced in the Senate in March by Sen. Debbie Stabenow, D-Mich., quickly gained broad bipartisan support, with Democrats Ron Wyden of Oregon and Claire McCaskill of Missouri and Republicans Susan Collins of Maine, John Barrasso of Wyoming and Bill Cassidy of Louisiana signing on as co-sponsors, with other lawmakers joining later.

"It's outrageous that companies can stop pharmacists from telling customers how to pay less for their prescriptions," Stabenow stated in March. "Customers have the right to know the lowest price available to them at the pharmacy."

The legislation would make "prices transparent so patients can save money with less expensive prescriptions," Cassidy said in a Sept. 5 statement.

Wyden, the ranking member on the Senate Finance Committee, noted that a recent analysis by health policy and economic researchers at the University of Southern California found that about one-quarter of filled pharmacy prescriptions involved a patient copayment that exceeded the average reimbursement paid by the insurer by over $2.

He called on the House to immediately pass the Senate bill "before any more seniors and families get ripped off."

Another bill, the Patient Right to Know Drug Prices Act, or S. 2554, led by Collins, would place a similar ban on gag clauses in contracts from private insurers who cover drug plans offered through private-sector employers and the Affordable Care Act exchanges. That bill remains pending in the Senate, though it cleared the chamber's Health, Education, Labor and Pensions Committee in July.

House bill

Meanwhile, the House Energy and Commerce Health Subcommittee mulled over its own legislation to ban gag clauses during a Sept. 5 hearing, where it heard from a panel of witnesses on that and matters related to Medicaid.

That bill, introduced by Rep. Buddy Carter, R-Ga., a pharmacist, would prohibit Medicare and private health insurance plans from using gag clauses in their contracts with pharmacies.

The subcommittee is expected to vote on the Carter bill next week.

Pharmacy owner Hugh Chancy, who was representing the National Community Pharmacists Association at the hearing, said he first ran across a gag clause three years ago when he notified the mayor of a small town in Georgia that he could buy his prescription drug less expensively with cash than paying his insurer's $26 copayment.

Shortly thereafter, the insurer's PBM issued a verbal warning to Chancy's pharmacy, accusing it of violating its contract's gag clause and disparaging the owner by talking to a patient about his drug's cost.

The PBM warned Chancy that there would be consequences if the pharmacy broke the gag clause again, including possibly being excluded from the payer's network, the pharmacist told the House subcommittee.

Strained relationships

Gag clauses strain the relationships between pharmacies and PBMs, Chancy said.

Worse, pharmacists' relationships with patients, which are built on trust, are damaged, he said.

Patients "depend on us to ... help them maneuver through the intricacies of their healthcare, specifically with their prescription benefits," Chancy said. "When we're not able to give them options, then it kind of puts us in a situation where we aren't able to give them information that we feel like they need. If we do, then we're running the risk of being in violation of contracts that sometimes we didn't even know we were in violation of."

Some PBMs have even included statements in their contracts that can be interpreted as prohibiting communication with news media, policymakers and elected officials about the gag clauses, Chancy said.

"Ultimately, these provisions have the effect of chilling a range of pharmacist communications with patients for fear of retaliation by the PBM," he said.

The Center for Medicare and Medicaid Services in May had warned Medicare Part D plans against using gag clauses in their contracts, telling them such practices were unacceptable.

In addition, at least 25 states have passed legislation prohibiting gag clauses.

"These actions give pharmacists the ability to point to laws and rules that prevent PBMs from restricting the free flow of information," Chancy said.

David Yoder, executive director of member care and benefits at Blue Cross Blue Shield Association's Federal Employee Plan, told lawmakers his organization does not support the use of gag clauses and is unaware of any use of those provisions by its related insurance companies or contracted PBMs.

Yoder said his organization supported the legislation to ban gag clauses, though he insisted the use of those provisions in contracts was "not very prevalent."

While full transparency is critical for consumers to have the information they need to make the best choices on their medicines, Yoder also warned that those purchases do not count toward the beneficiary's deductible or maximum out-of-pocket limits, which may reduce the value of their insurance coverage.

Therefore, consumers should also be informed about the potential consequences of not using their drug coverage, Yoder said.